By Tim Peniston-Bird, Managing Director at Orangutan
The purpose of a customer loyalty programme is to help improve customer engagement and loyalty to improve retention, spend and referrals. This should be an integral part of the customer experience and should be available to all customers – whether they are cash, store card or credit card.
Getting Closer
By running your own loyalty programme, you have total control over opportunities for two way communication, interaction, behavioural nudges, feedback and reward. This means that you can create brand experiences as rewards that can deepen your relationship for example customers use points to buy:
- an invitation to a Korean cookery class
- or a Vegan nutrition workshop in a grocery store
- or exclusive fashion show and range preview for a fashion store
- or a skid pan training session at Brands Hatch in the new Celica for a Toyota dealer
Each creating a closer relationship and building a wider positive connection between you and your customer.
You can link up with third parties to widen that association and widen the offers for complementary products and services – this means you can be associated with exciting experiences and brands that your customers will talk about (and you) with their family and friends.
By getting customers to share information with you, you can personalise their experience for example; getting married, collecting points towards a honeymoon and get offers on champagne, canapes, flowers …
There are also opportunities to nudge customers into subscribe and save options where you are ring fencing their monthly spend with you but saving them time and money in return.
Value
Have you ever come across an imaginative banker? The average payment card provider will suggest cashback or maybe an Amazon voucher – put against this the use of 3rd party vouchers where our clients are offering apartment holidays in Tenerife, becoming a Lord or Lady, days out for 2 or a 4 star 3 night hotel break in Paris, New York or Manchester for less than 2000 Nectar points (£10 to spend in Sainsburys).
One of the main reasons for this is that the card provider cannot be seen to be cutting across any of their customers – so they cannot offer hotel breaks as that will upset Holiday Inns and they cannot offer wine as that would upset Coop for example.
The other side of the value argument is that if customers can collect points from multiple sources, they quickly hit a comfort level where they have achieved the points they need to reach the award they are saving for. This means that all you are doing is rewarding purchases that they would have made anyway rather than being able to drive behavioural change.
Insights
By analysing customer purchase behaviour, it is possible to predict future behaviour and what level of engagement they have with your brand. This is at best clouded through a multi vendor or payment card association and at worst prohibits your access to this rich source of customer insights.
Bandwidth
The average consumer belongs to 14.8 loyalty programs but is only active in 6.7 of them. (Bond). The average American has 3.84 credit card accounts (Experian) along with store and debit cards which will have similar activity levels – with all the noise generated by these channels, consumers are overwhelmed. By creating a strong membership proposition it is possible to leverage a relationship that effectively blocks out competitors from this space.
In summary, with all the benefits that can be achieved by delivering an effective customer loyalty programme – why would you want to give all those benefits away?
Tim Peniston-Bird (54), MD of Orangutan based in Surrey has worked with many leading businesses to drive customer and channel loyalty and growth both in the UK and globally.
